Update: Microsoft CEO Ballmer to retire in 12 months

The company's board has created a committee to find a new CEO (see video below)

Steve Ballmer will retire as Microsoft CEO at some point in the next 12 months, the company said on Friday in a surprising announcement that comes weeks after he drafted a major business reorganization that's being implemented now.

"There is never a perfect time for this type of transition, but now is the right time," Ballmer said in an email to his employees. "My original thoughts on timing would have had my retirement happen in the middle of our company's transformation to a devices and services company. We need a CEO who will be here longer term for this new direction."

He noted that it is a time of important transformation for Microsoft. "Our new senior leadership team is amazing. The strategy we have generated is first class. Our new organization, which is centered on functions and engineering areas, is right for the opportunities and challenges ahead," Ballmer wrote.

"This is an emotional and difficult thing for me to do. I take this step in the best interests of the company I love; it is the thing outside of my family and closest friends that matters to me most," he wrote, adding that Microsoft has "all its best days ahead."

The company's board of directors has created a special committee to find his replacement.

The committee includes Microsoft founder and current chairman of the board Bill Gates and is headed by John Thompson, the board's lead independent director, Microsoft said. Both internal and external candidates will be considered.

The new CEO must turn Microsoft into a successful devices and services company and must work with the company's leadership team to achieve this in an highly competitive industry, Microsoft said.

Ballmer has been CEO Microsoft since 2000. He joined Microsoft in 1980 and was the company's first business manager. After that, he held different roles in the company including senior vice president of sales and support, senior vice president of systems software and vice president of marketing.

Microsoft CEO since 2000, Ballmer wrote in an email to employees that Microsoft's \"best days are ahead.\" Ballmer will stay in command until his successor is found.

Loek Essers is Amsterdam Correspondent and covers online privacy, intellectual property, open-source and online payment issues for the IDG News Service. Follow him on Twitter at @loekessers or email tips and comments to loek_essers@idg.com